Homebuyers who want a mortgage with HSBC will have to use one of 43 firms approved by the bank to do their conveyancing - or pay more for their legal work, the Guardian reported. Until now, customers could choose their own legal firm which would also act for HSBC.
The lender changed its rules following warnings over mortgage fraud from the National Fraud Authority, which estimates fraud totals £1 billion a year.
If borrowers choose a firm from HSBC's list of approved solicitors, they pay a fixed fee to cover the cost of their own and the bank's legal work. But if they choose their own legal firm they will have to pay a separate £192 fee for HSBC's lawyer. This will be more expensive in most cases than using a firm from the panel. The fixed fees for conveyancing range from £399 on a property costing up to £100,000 to £549 on one worth between £300,000 to £500,000.
Other lenders, such as Santander and Nationwide, have also reduced the panels of conveyancing firms they will work with. But HSBC's cull goes much further and the Law Society has questioned whether there are enough firms on the panel.
"The disabled, those living in rural areas or even those wishing to simply use their family solicitor will either have little choice but to opt for the same solicitor as HSBC – one of their panel firms – or pay twice over, for their own solicitor as well as HSBC's legal fees."
HSBC said it would consider applications from other firms that want to join the panel. Peter Dockar, head of mortgages at HSBC, said: "Our new panel arrangement will spare customers the time and hassle of searching for a firm to do the important conveyancing work on their new property.
"Customers who choose to use a firm on the panel can benefit from agreed conveyancing costs as well as valuable guarantees should the seller pull out."